Housing glut sends prices down record 15.8%

Bank-owned home is on the market in April in Moreno Valley, Calif. Nine U.S. cities posted record price declines, and sales of existing homes are the slowest in a decade.

NEW YORK  More than 800,000 vacant homes for sale stand between the housing recession and the bottom. And that glut is driving down home prices, slowing sales and turning consumer psychology against the market.

New figures out Tuesday showed home prices fell by a record 15.8 percent in May from a year ago, with none of the 20 cities surveyed registering a price gain. The Standard & Poor's/Case-Shiller Home Price Index is now down more than 18 percent from its peak in July 2006.

No Utah cities were included in the index, though some areas in the state experienced sharp declines in year-over-year median home-sales prices during the second quarter of 2008, according to data released this month by the Salt Lake Board of Realtors.

Pleasant Grove, for instance, saw prices fall 17.75 percent from the second quarter of last year to the same period this year. The median sales price for a house in Kaysville dropped 23.20 percent. In Salt Lake City, the median sales price in the Foothill Drive/Emigration Canyon area fell 18.39 percent.

But county-wide, the median price declines were not as severe. In Salt Lake County, the median sales price fell 1.61 percent year-over-year to $249,000. The median sales price in Davis County fell 1.75 percent to $225,000. And in Utah County, the median sales price dropped 4.08 percent to $235,000.

Nationwide, nine cities in the Case-Shiller index posted record declines, including Miami near where Sharon McKenney, 55, and her husband are trying to sell their four-bedroom, waterfront home.

They were asking $550,000 for their home in Palmetto Bay, a bargain, McKenney thought, compared to neighboring properties listed around $625,000. But there have been no offers, so they cut the price to $545,000.

"I'm frustrated. However, I still feel like it's priced very well, and I don't see myself lowering it," McKenney said. "The thing of it is, there's so many (homes) on the market, people keep thinking, if they keep looking they'll find something better, something cheaper."

Tuesday's home-price figures follow a litany of pessimistic housing reports and financial results from builders and lenders. The pace of existing home sales is the slowest in a decade, and roughly one out of every five sold is a foreclosure. Consumer confidence data released Tuesday, while breaking a six-month fall, also remains near 16-year lows.

Yet the crux of the housing problem  why the bottom is still many months away, and maybe more than a year  is the percentage of vacant U.S. homes for sale sits just below a record high.